Bitcoin (BTC) surged to $63,000 on the 3rd of July, but fell $50 short. Ether (ETH), meanwhile, outperformed all other currencies, pushing up to $1,775. BTC and ETH both hit new year-to date lows a few weeks before the end-of week rally. Highlighting the negative sentiment, the Crypto Fear & Greed index registered “Extreme Fear” At 11 out of 100.
Crypto Fear & Greed Index. Source: Alternative.me
The gap between them is a factor of ten. “Extreme Fear” It is important to note the bullish activity on Friday and reading. US Bitcoin spot exchange-traded fund (ETF) held a net inflow of $221.7m on Friday, July 2. It was the largest inflow for a single day since May. This marked a change from 10 consecutive outflows.
Bitcoin ETF netflows. Source: SoSoValue.com
Bitcoin and Ether gains are driven by futures markets
This is because the market’s leverage looks much more lopsided when compared to the data on spot purchases. “Funding,” The periodic payment that traders who bet on higher prices pay to traders who bet on lower prices, when the market is bullish has remained positive over the last eight days.
Bitcoin open interest, funding rate. Hyblock is a source for Bitcoin open interest rate.
A total of leveraged Bitcoins is at its highest in several days, despite the fact that the price has largely moved sideways. The accumulation of leverage without much price progress is generally seen as more of a warning sign than a confirmation that there is a rally underway.
Related: Bitcoin holds $61K after US jobs data report, AI sector weakness: Did BTC bottom?
How fast can bulls run?
As we look ahead to the coming trading sessions, there are a couple of key reference points that stand out. The cautious approach is to watch whether Bitcoin remains above the $61,000 mark, which is where many leveraged buying positions are located. Also, the ETF’s inflow on Wednesday will be an important indicator of whether it was a temporary event or a start of a long-term trend.
The more positive side is that a return to $62,500 will put Bitcoin at a price level where leveraged long positions can become exposed. Continued buying along with an ever-growing number of leveraged position would continue the recent pattern.
Bitcoin liquidation heatmap. One-month view. Source: Hyblock
Market sentiment isn’t clearly bullish, or bearish. It’s a mix. A rebound in ETF flows and spot-buying suggest sentiment could be improving quicker than indicated by the Fear-and-Greed indicator. But a market that is so deeply fearful, with its focus on higher prices can be very fragile. This is exacerbated by the upcoming US Holiday-weekend period of thinner trading.
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Source: cointelegraph.com
